Traditional loyalty programs have been around forever and serve a distinct and extremely useful purpose.
But premium loyalty programs are a newer rising trend. Their popularity has risen in recent years and helps make your best customers exponentially more valuable.
Last year two well-known brands launched premium loyalty programs: Best Buy (Totaltech), Kroger (Boost By Kroger Plus), and Walmart (Walmart+).
In 2020 Panera launched a subscription loyalty program to spark interest in its MyPanera loyalty program.
Could your brand be missing out by not offering a premium loyalty program?
Let’s find out through some eye-opening statistics in our 2022 Premium Loyalty Data Study.
Consumers Demand Instant and Better Benefits
Seventy-eight percent of all consumers say they don’t want to wait to accumulate points in loyalty programs and think loyalty programs should provide immediate benefits. Your brand can achieve this by offering a premium tier that allows members to opt-in to instant benefits for a fee.
Here’s a critical stat that strongly connects the relationship between traditional loyalty and premium loyalty: 83% of consumers said they were likely to invest in a brand’s premium loyalty program if they already belong to that brand’s traditional loyalty program.
Traditional loyalty program members are increasingly willing to shift to premium loyalty for better benefits and experiences.
Like with many things in life, consumers always love a choice. So, a traditional loyalty program can acquire a customer and a premium loyalty program with enhanced benefits can get them to stay with your brand for the long term.
That feeling of exclusivity and receiving special treatment cements the customer-brand relationship and adds an important emotional component. Traditional loyalty programs serve a distinct, useful purpose and can lead to members becoming premium loyalty members as well.
Premium Loyalty Members Shop With You Often
Consumers want new avenues of engagement and this year will be pivotal for brands to attract more loyal customers. Offering a premium loyalty program is a great way to engage and retain more members.
Consider 71% of premium loyalty members shop with brands whose programs they participate in at least once a week. This is an impactful statistic and immediately demonstrates the value of premium loyalty members.
Ninety-one percent of premium loyalty members are likely to choose a brand over a competitor offering a lower price if they’re satisfied with the special benefits offered by the brand’s program.
And 91% of premium loyalty members are likely to recommend a brand to friends or family when the brand offers a program with benefits they find valuable.
Premium loyalty members are your best customers. They’re the ones raising their hands, telling their favorite brands they’re willing to pay for exclusive benefits, access, and experiences that build emotional connections.
Premium loyalty is about making your best customers exponentially better and more valuable. That’s why these customers are so valuable to your brand. Consider premium loyalty members are 4x more valuable than non-premium loyalty members.
When you factor in the shopping frequency premium loyalty members possess, and their eagerness to act as brand ambassadors among their families and friends, it’s a win-win situation.
A Great Example of a Brand Offering Both Traditional and Premium Loyalty
CVS Offers CVS ExtraCare (traditional) and CVS CarePass (premium).
CVS has done a phenomenal job acquiring new members, considering there are 74 million ExtraCare members. The program offers cash back and extra savings.
For CVS’s best customers, CarePass launched with a $5 monthly fee.
CarePass offers free delivery on eligible prescriptions, along with fast, free shipping, and instant discounts on certain CVS Health brand items. CarePass members also receive monthly rewards that can be used in-store and online.
CarePass also offers an experiential element to its members: Access to a live pharmacist chat line 24/7. CVS offers benefits like 20% off CVS Health® brand products and the program helps drive revenue by getting people in the store to make other potential purchases.
The beauty of CarePass is it allows CVS customers a choice. When it comes to customer loyalty, choice is an important element in retention.
CVS helps its loyalty program members save time, money, and receive access to on-demand pharmacy care. Membership includes free one-day or two-day delivery on certain prescription drugs and eligible purchases with no minimum amount required.
CarePass allows CVS an ancillary revenue stream, gives company officials better and more accurate member data, elevates customer engagement and builds stronger two-way relationships.
Here’s a breakdown of types of consumers likely to invest in a brand’s premium loyalty program if they already belong to that brand’s traditional loyalty program, broken down by generation:
- 88% Gen Z
- 90% Millennials 85
- % Gen X
- 66% Baby Boomers
- 61% Silent Generation
Brands Should Strike While the Premium Loyalty Iron Is Hot
Premium loyalty programs have gained prominence as more brands embrace them.
Consider that 78% of consumers said they’re willing to pay to join a premium loyalty program, according to our 2022 Premium Loyalty Data Study.
And 77% of non-premium loyalty members in 2022 indicated a willingness to join a premium loyalty program if their favorite brands offered them and the benefits were valuable to them.
When you combine the willingness of consumers to join premium loyalty programs with the fact that 31% of consumers say their favorite brands don’t offer them, you have a big opportunity.